Central Bank Form and Function

Key Takeaway

• The European Central Bank (ECB), the central bank of the nations that have adopted the euro, and the larger European System of Central Banks (ECSB), of which it is a part, are modeled after the Fed. Nevertheless, numerous differences of detail can be detected. The ECB's national central banks (NCBs), for example, are much more powerful than the Fed's district banks because they control their own budgets and conduct open market operations. Most of the world's other central banks are structured differently than the ECB and the Fed because they are unit banks without districts or branches. Most are less independent than the Fed and ECB but conduct monetary policy in the same ways.